The company, headed by chief executive Gavin Slark, generates the bulk of its revenue and profits in the UK, where it has a large number of builders’ merchanting outlets.

“Activity levels benefitted from an improvement in economic conditions as the year developed and trading in the final months of the year provided further evidence that the recovery underway in the group's markets has started to take hold,” it said in a trading update this morning.

Average daily like-for-like sales in its UK merchanting business rose 3.2pc last year, while at its Irish merchanting operation, the figure was up 3.6pc.

At its Irish retail business – the Woodies and Atlantic arms – average daily like-for-like sales climbed 1.5pc in 2013.

“Grafton is well placed to benefit from a sustained improvement in trading conditions, but we are adopting a cautious stance towards our prospects for 2014 until such time that activity levels in our principal markets have strengthened further,” said Mr Slark.